Category: Mortgage

Self-employed mortgage borrowers face an even tougher set of challenges in a cost-of-living crisis and high interest rate environment than their PAYE counterparts when it comes to getting a mortgage.

But self-employed mortgage product choice and lender support are strong, say brokers, putting today’s market back on a par with pre-pandemic conditions.

Homeowners who work for themselves not only have their own rising bills and interest rates to manage, but some must deal with their customers cutting back on how much they spend as budgets get tighter.

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Homeowners have been dealt a fresh blow after experts warned key mortgage rates could surge above 6 per cent again as early as next week.

More than 20 lenders have hiked their mortgage rates this week, pulling some of the most competitive home loans from the market, including several deals below 5 per cent.

The cost of borrowing has been surging since Bank of England officials signalled last week that a long-awaited cut in rates would be delayed further. 

Santander yesterday increased its mortgage rates by up to 0.26 percentage points for the second time in four days.

The move follows increases at NatWest, Halifax and Nationwide, which also pushed up the prices of their fixed-rate purchase and remortgage deals by up to 0.25 percentage points.

Now, the average two-year fixed-rate deal could breach the 6 per cent mark in the coming days – for the first time since December. 

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Halifax said the average UK house price, external had risen by 0.1% in April, with a typical home now valued at £288,949.

Prices last month were up 1.1% from the same point last year, following a 0.4% annual rise seen in March.

Amanda Bryden, head of mortgages at Halifax, said the housing market was “finding its feet in an era of higher interest rates”.

“While borrowing costs remain more expensive than a few years ago, homebuyers are gaining confidence from a period of relative stability,” she added, with activity and demand improving.

“However, we can’t overlook the fact that affordability constraints are still a significant challenge, for both new buyers and those rolling off fixed-term deals,” Ms Brydon said.

“Mortgage rates have edged up again in recent weeks, primarily as a result of expectations around future Bank of England base rate changes, with markets now pricing in a slower pace of cuts.”

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Nearly 900,000 households are expected to see their mortgage repayments rise by £240 on average ahead of the next General Election, according to new analysis.

Data from the Financial Conduct Authority (FCA) suggests that 4,200 mortgage holders will pay more between now and the expected election in November.

Research conducted by the House of Commons Library, commissioned by the Liberal Democrats, found that “Blue Wall” voters in Southern England are more likely to be hit hardest.

According to this analysis, the regions where mortgage deals are most likely to expire in the next six months include Greater London, the North West and the South West.

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The Bank of England base rate has been paused once again at 5.25%.

This marks the sixth time in a row where its Monetary Policy Committee (MPC) has decided not to increase borrowing costs – however, the base rate still remains at its highest level in 16 years. Economists had widely expected the base rate wouldn’t be cut just yet.

The base rate is what the Bank of England charges other banks and lenders to borrow money, with this then having a direct impact on how much you’re charged as a customer. Millions of homeowners have been hit with higher mortgage costs due to how much the base rate has increased since December 2021, when it stood at just 0.1%.

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Homeowners coming off fixed rate mortgages faced huge rises in their monthly payments, latest figures have revealed, with the costs severely biting into household disposable income.

With the Bank of England base rate rising to 5.25 per cent in the summer of last year, families faced soaring mortgage rates with the average two-year fixed rate reaching 6.9 per cent.

The new rates meant many homeowners, especially those with large mortgages still to pay, faced challenging increases in monthly payments.

Last year, more than 1.4m households in the UK had fixed rate mortgage up for renewal, with more than half coming off rates of less than two per cent.

Ken James, director at Contractor Mortgage Services, told The Independent that the change in payments meant some were forced to either extend their mortgages or even sell up and move elsewhere.

“And while they may have had money in previous years for a holiday or a new car, they are now having to hold back as their monthly mortgage payments rise,” he added.

The Office for National Statistics has published estimates on the impact of the rising mortgage rates for those impacted in 2023, breaking the figures down by region to calculate which areas were most exposed.

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House prices fell in April as potential buyers continued to face pressure on affordability, according to the Nationwide. The UK’s biggest building society said that UK house prices were down by 0.4% compared with the previous month. It said the average home cost £261,962, some 4% below the peak in the summer of 2022. The rising cost of borrowing was key to the latest fall in prices, it said. ‘Rock-bottom rates long gone’ The figures come after a string of lenders raised rates on new fixed-rate mortgage deals in recent days. The…

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When people buy a home they tend to think they are making a sound investment, as prices tend to rise in the long run.

But unless they are a cash buyer, they require a mortgage from a lender in order to purchase a property.

They will then spend decades repaying that mortgage, with a large portion of their monthly payments going on interest.

While it’s easy to know how much they’ve made from house price growth when they come to sell, homeowners usually pay less attention to how much the mortgage has cost them in the meantime.

With mortgage rates having risen over the past two years, it means the total amount paid back is more likely to have superseded any gains made by house price growth during that time.  

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An analysis of government house price data by business consultancy Hargreaves Lansdown suggests the typical mortgage term for a first time buyer has now stretched to 32 years.

This revelation emerges from Office for National Statistics data which says that in England in 2023, the average house price was £290,000 and the average annual income was £35,100 – so houses cost 8.3 times income. This is actually down very slightly since 2022, when it was 8.5 times.

The ONS affordability threshold is five times earnings – and in England and Wales we have been above this since 2002. The least affordable area is Kensington and Chelsea, where property costs 34.2 times earnings.

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